Cost cutting in Europe and a restructuring of financial arrangements with former parts making subsidiary Visteon caused Ford Motor Company to post a net loss of $US793 million, or 43 cents per share, for the fourth quarter of 2003, compared with a net loss of $130 million, or 7 cents per share, for Q4 2002.
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But the company on Thursday reported full-year 2003 net income of $495 million, or 27 cents per share, its first full year profit since 2000, which compares with a net loss of $980 million, or 55 cents per share, for full-year 2002.
Including special items, Ford’s 2003 pre-tax profit totaled $1.4 billion, an increase from $951 million in 2002. Ford’s 2003 pre-tax profit, excluding special items, increased to $3.4 billion from $1.9 billion in 2002.
Total sales and revenue for full-year 2003 was $164.2 billion, up from $162.3 billion a year ago. Vehicle unit sales were 6,720,000, down slightly from 6,973,000 in 2002.
Ford said it achieved cost reductions of $3.2 billion during the year.
For the full year, Ford’s worldwide automotive sector earned a pre-tax profit of $104 million in 2003, a $357 million improvement from a loss of $253 million a year ago.
For the fourth quarter, Ford’s worldwide automotive operations reported a pre-tax loss of $4 million, a $236 million improvement from a year-ago loss of $240 million.
Automotive revenue for full-year 2003 was $138.4 billion, up three percent from $134.3 billion a year ago. Automotive revenue for the fourth quarter was $39.8 billion, up from $34.6 billion a year ago.
The Americas, which includes the company’s automotive operations in North and South America, reported a 2003 pre-tax profit of $1.6 billion, down $236 million from 2002.
For the fourth quarter, the Americas reported a pre-tax profit of $193 million, compared with a pre-tax profit of $417 million in 2002.
North America operations posted a full-year 2003 pre-tax profit of $1.8 billion, compared with $2.5 billion last year. The decline was primarily due to the absence of an increase in dealer stocks in 2002, unfavourable net pricing, lower market share and unfavourable exchange rates, partially offset by cost savings and favourable mix. Full-year revenue totalled $83.6 billion, down from $87.1 billion a year ago.
The North America automotive pre-tax profit for the fourth quarter was $197 million, down from $513 million a year ago. The decrease primarily reflected higher costs related to the introduction of new vehicles, higher pension and healthcare expenses, and unfavourable exchange rates, partially offset by cost reductions in other areas, improved mix and favourable net pricing. Revenue increased to $22.8 billion from $21.2 billion in the year-ago period.
Ford’s South America operations reported a 2003 pre-tax loss of $130 million, a $492 million improvement from 2002. The improvement reflected the non-recurrence of currency devaluations in 2002, favourable mix, higher market share, improved net pricing and lower costs. Revenue was $1.9 billion, up $328 million from 2002.
For the fourth quarter, South America’s automotive pre-tax loss totalled $4 million, a $92 million improvement from 2002. The improvement primarily reflected lower costs, favourable mix, higher market share and improved net pricing. Revenue increased to $623 million, compared to $335 million in the 2002 fourth quarter.
International automotive operations reported a full-year pre-tax loss of $905 million, a $575 million improvement from a 2002 loss of $1,480 million.
For the fourth quarter, international automotive pre-tax profit totalled $172 million, an improvement of $624 million from a year-ago loss of $452 million.
Ford Europe’s automotive operations reported a pre-tax loss of $1.1 billion for 2003, compared with a loss of $549 million a year ago. The decline primarily reflected unfavourable net pricing, adverse mix, unfavourable exchange rates, and a reduction in dealer stocks, partially offset by cost reductions. Full-year revenue totalled $22.2 billion, up from $18.9 billion a year ago.
For the fourth quarter, Ford Europe reported a pre-tax profit of $60 million, an improvement of $77 million from a loss of $17 million a year ago. The improvement primarily reflected lower costs, improved results at Otosan, a joint venture in Turkey, and higher dealer stocks. These were offset by lower pricing, lower market share and unfavourable exchange. Fourth quarter revenue totalled $7.4 billion, an improvement of $1.8 billion over the year-ago period.
Ford’s Asia Pacific automotive operations posted a loss of $25 million, an improvement of $151 million from a loss of $176 million in 2002. The improvement primarily reflected favourable exchange rates, improved net pricing, higher industry volumes in the region and improved market share. Revenue increased to $5.8 billion from $4.4 billion in 2002. Asia Pacific’s fourth-quarter pre-tax profit totalled $26 million, a $61 million improvement from a loss of $35 million in the year-ago period. The increase in profitability is primarily explained by favourable exchange rates and lower costs, partially offset by unfavourable net pricing. Revenue increased to $1.5 billion, compared with $1.3 billion in the 2002 fourth quarter.
Premier Automotive Group reported a pre-tax profit of $164 million for 2003, compared with a loss of $740 million last year. The improvement of $904 million primarily reflected cost reductions and improved mix, partially offset by unfavourable exchange rates. Revenue increased to $24.9 billion from $21.3 billion a year ago.
PAG’s fourth-quarter pre-tax profit totalled $108 million, a $496 million improvement from a year-earlier loss of $388 million. The improvement primarily reflected cost efficiencies and favourable volume and mix, partially offset by unfavourable exchange rates. Revenue increased to $7.5 billion from $6 billion in the year-ago period.
Ford Motor Credit Company reported record net income of $1.8 billion in 2003, up $583 million from earnings of $1.2 billion a year earlier. On a pre- tax basis, Ford Credit earned $3.0 billion in 2003 compared with $2.0 billion in 2002. The increase in earnings primarily reflected a lower provision for credit losses and the favourable market valuation of derivative instruments and associated exposures, partially offset by the impact of lower average net receivables.
In the fourth quarter of 2003, Ford Credit’s net income was $470 million, up $116 million from $354 million in the same period a year earlier. On a pre-tax basis, Ford Credit earned $839 million in the fourth quarter of 2003 compared with $594 million in 2002. The increase in earnings primarily reflected a lower provision for credit losses, the favourable market valuation of derivative instruments and associated exposures, offset partially by lower sales of receivables.
OUTLOOK
Anticipating quality improvements, regional market-share stability or gains, and continued cost reductions, Ford expects full-year 2004 earnings per share of $1.20 to $1.30 from continuing operations, excluding special items. This outlook assumes 2004 industry sales of 17 million vehicles in the US and 16.9 million vehicles in Europe.
Ford’s first-quarter earnings guidance is a range of 40 to 45 cents per share, based on income from continuing operations, excluding special items.
